Age discrimination doesn't always apply
Published 08/06/04

Employers who offer voluntary retirement to older workers should not expose themselves to liability in subsequent age discrimination claim under the federal Age Discrimination in Employment Act (“ADEA”) by older workers who were subsequently fired.

This point was illustrated in the Federal Seventh Circuit Court of Appeals in the case of Terry Cerutti v. BASF decided on November 21, 2003. That case arose out of the layoff of 23 employees at the BASF styrenics manufacturing plant in Joliet, Illinois. Ten of those workers filed suit against BASF alleging that the company fired and declined to rehire them on the basis of age, among other reasons. BASF was successful in convincing the Court to summarily dispose of the case and not allow it to go to a jury. BASF argued that its layoff was based upon legitimate criteria as to who would be the best performers and be able to do more with less in that facility after the corporate restructuring of the styrenics operating unit.

The workers argued in part that BASF showed an age discriminatory animus prior to firing them by offering an early retirement to certain older workers in the first phase of its restructuring process. BASF had offered to all workers age 53 or over with ten or more years of service with the company as of December 2000 a voluntary special early retirement program.

Thereafter, as the second phase of the restructuring all workers who desired to continue their employment in the unit, young and old alike, were assessed to determine whether they possessed the competencies the company believed were necessary to effectively restructure the unit. Workers who lacked these competencies were fired, or as BASF put it “deselected”. The Court noted that an offer of incentives to retire early is a benefit to the recipient, not a sign of discrimination. Nor is it reasonable to infer that the retirement program offered by BASF in the first phase of the restructuring process was discriminatory or involuntary merely because some of the workers who accepted the company’s offer did so out of fear that they would not make the grade after being assessed.

The Court noted that the ADEA is not intended to protect older workers from the often harsh economic realities of common business decisions and the hardships associated with corporate reorganizations, downsizing, plant closings and relocations. Therefore, an employer merely offering a voluntary retirement program as part of its initial phase of a restructuring is not thereafter prevented from firing certain remaining older workers based upon legitimate business reasons.

J. Daniel Marr is a director and shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

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